Lokale en mondiale gevolgen van de nieuwe Europese richtlijn voor hernieuwbare energie in de transportsector. Een eerste analyse van de voorgestelde duurzaamheidscriteria

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Local and global consequences of the EU

renewable directive for biofuels

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Local and global consequences of the

EU renewable directive for biofuels

Testing the sustainability criteria

B. Eickhout G.J. van den Born J. Notenboom M. van Oorschot J.P.M. Ros D.P. van Vuuren H.J. Westhoek

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MNP Report 500143001/2008 Contact

Bas Eickhout

Bas.Eickhout@mnp.nl © MNP 2008

Parts of this publication may be reproduced, on condition of acknowledgement: ‘Netherlands Environmental Assessment Agency, the title of the publication and year of publication.’

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Rapport in het kort

Rapport in het kort

Locale en mondiale gevolgen van de nieuwe Europese richtlijn voor hernieuwbare energie in de transportsector. Een eerste analyse van de voorgestelde duurzaamheidscriteria.

Dit rapport analyseert de effecten van het voorstel van de Europese Commissie voor een nieuwe richtlijn voor hernieuwbare energie. Hierbij wordt alleen ingegaan op het doel voor de trans-portsector, wat neerkomt op 10% hernieuwbare energie in 2020 ten opzichte van de totale energievraag. Zoals het doel is geformuleerd, zal dit bijna volledig moeten worden gehaald door biobrandstoffen.

De Europese Commissie stelt duurzaamheidscriteria voor waaraan de biobrandstoffen moeten voldoen als ze willen meetellen bij het 10%-doel. Deze criteria gelden voor de broeikasgas-balans en het tegengaan van ongewenste landgebruiksveranderingen en verlies van biodiver-siteit. Andere effecten van biobrandstoffen, zoals hogere voedselprijzen, zijn niet in criteria vertaald.

Het doel van de Europese Commissie kan alleen worden gehaald door ook buiten de Europese Unie biobrandstoffen te telen. Hiervoor zal ook extra landbouwland nodig zijn. Het is onzeker of deze landconversies buiten de EU kunnen worden gedaan zonder extra broeikasgas emissies. Daarnaast is verlies van biodiversiteit onvermijdelijk op de korte termijn. De criteria van de Europese Commissie zijn onvoldoende om deze effecten mondiaal tegen te gaan.

Omdat het onzeker is of alle zogenaamde tweedegeneratiebiobrandstoffen betere resultaten zullen opleveren, is de vraag gerechtvaardigd of het voorgestelde doel van de Europese Commissie voor 2020 gehandhaafd moet worden. Aangezien er alternatieven voor de

transportsector op de lange termijn aanwezig kunnen zijn, zou de Europese Commissie kunnen inzetten op stimulering van deze verschillende alternatieven. Het huidge voorstel doet dit in onvoldoende mate door de gekozen doelstelling.

Trefwoorden:

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Contents

Summary

The European Union has set a target for an obligatory share of 10%, for energy from renewable sources in transport, to be reached in 2020. This applies to final energy consumption in transport within each Member State. This target for the transport sector is expected to be met, mainly by using biofuels, although other routes, like using electricity (plug-in technology), are also think-able. In the proposal for the Directive (released 23 January 2008), the European Commission pays much attention to sustainability criteria for biofuels and bioliquids, following the debate on whether the negative aspects of biofuels outweigh their benefits as a renewable energy source. In this report, a first analysis is given on these sustainability criteria in the transport sector. The application of biomass in other sectors, such as the electricity and heating and cooling sectors, is not assessed.

Transport target can only be met by imports from outside the EU

Considering default projections, 10% of the European transport consumption in 2020 amounts to around 35 million tonnes of oil equivalent. When grown in Europe with existing technologies (‘first generation’), an area of 20 to 30 million hectares is needed for the production of biofuels. This amount of land is not likely to become available within Europe. Studies that do show the availability of large amounts of land, usually assume full liberalisation of European agricultural policies, using a considerable amount of set-aside land and the diverting of existing land use. However, such a drastic reform of European agriculture is not likely to occur within a short time frame. It is also not likely that land which is best suited for large-scale biofuel production will become available when liberalisation will occur. Diversion of land use will not minimise total land use, globally. More importantly, when full liberalisation of Europe’s agriculture will be applied, it will be almost impossible to steer foreign biofuel production with European poli-cies. Studies that implemented Europe’s 10%-target in 2020 in a fully liberalised world (the Eururalis-study), concluded that more than 50% of Europe’s biofuel demand would be imported. Furthermore, the origin of biofuels grown inside the European Union (EU) is uncertain. There-fore, it remains unclear whether new Member States in Central Europe will benefit most from biofuel production. The European Commission assumes lower biofuel imports are needed to meet the 10%-target, than is suggested by the Eururalis study. This uncertainty is of great impor-tance when the effectiveness of the proposed sustainability criteria is assessed. The results may change when new biofuel conversion techniques will enter the market, but large-scale applica-tions before 2020 are unlikely.

Global land use will increase in the coming decades

The additional land demand for biofuels comes on top of default baseline developments as shown in this report. Even in a baseline where no explicit biofuel policies are assumed, total land use is projected to increase. The total area of wheat, maize, oilseeds and sugar cane is projected to grow by 10% between 2000 and 2020, already assuming substantial improvements in yield. With additional biofuel policies in the United States and the EU, an additional growth of 5% may be expected. This effect cannot be offset entirely by further yield growth. Therefore, the demand for biofuels will put additional pressure on land. This additional pressure on land, globally, asks for sustainability criteria. Criteria that can also be applied outside the EU. Even when most of the biofuels are grown within the EU (as concluded in the Commission’s Impact Assessment), criteria need to address the displacement effect: food and feed will be grown else-where outside the EU because productive land will be occupied by biofuel crops.

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Greenhouse gas reductions will not necessarily reach 35%

The Commission focuses on criteria which have to be met by individual economic operators. This means that criteria only apply to biomass which is produced at the level of each consign-ment. In this system, only criteria for greenhouse gas reductions and land use exclusion are addressed. For greenhouse gas reduction, individual operators have the choice between using default values or performing an elaborate analysis to calculate the reduction percentages of a specific biofuel production chain. By offering conservative default values for greenhouse gas reductions per biomass type, the current criteria can be applied very well, and offer some level of safety. Although these values are chosen with great care and the calculating methodology addresses most aspects of the life cycle, the default values are not necessarily met by ‘real’ production. Firstly, an excessive use of fertiliser may lead to additional N2O emissions, leading

to lower greenhouse gas reductions than presented by the default values. Secondly, economic operators may adjust the default greenhouse gas emissions in specific parts of the processing steps in the Commission’s proposal. An adjustment in such a step may, theoretically, lead to better performances than the required 35% greenhouse gas reduction and, therefore, meeting the required sustainability criteria, but in reality this 35% reduction is not necessarily met. More importantly, even the most carefully selected default values will not cover all negative side effects of biofuel production. Through displacement effects and the loss of soil carbon by other agricultural practices, some production chains may indirectly lead to a negative impact of biofuels. These aspects cannot be covered by the default values for greenhouse gas reductions. Therefore, global displacement effects should play a more important role in the sustainability criteria than is currently the case in the proposal for a Renewable Directive.

Impacts on biodiversity can be negative in the short-term

The land exclusion criteria in the Commission’s proposal are effectively targeted at several valuable land cover types, that either contain high soil carbon stocks or high biodiversity values. Categories of land which may be used for biofuel, are abandoned agricultural lands (from crop growth) and natural grasslands with low biodiversity values. Moderately degraded lands can also be used. Using abandoned intensively used agricultural lands and (moderately) degraded lands may be beneficial, as biofuel crop production can help to restore the biodiversity in these ecosystems. However, (semi-)natural and extensively used grasslands remain under further threat with the proposed land use criteria. Furthermore, a global analysis of available lands shows that the amount of abandoned areas, alone, will probably not be enough to meet the targets of the EU and the United States. This will add pressure to the global extent of natural and semi-natural grasslands. The exact meaning of the criterion ‘high diverse grasslands’ is not made clear in the current proposal, and is especially relevant for application outside Europe. Reducing greenhouse gas emissions is important to avoid future changes in biodiver-sity (through climate change). However, stimulating biofuel production does not contribute to this positive biodiversity effect, at least not within a time frame of several decades. An analysis with a ‘biodiversity balance’ indicator shows that, in most cases, the greenhouse gas reductions from biofuel production are not enough to compensate for biodiversity losses from land use change. This result will be even worse if soil carbon emissions from land use change are taken into account. In total, the European criteria are probably effective in preventing biodiversity loss within the European Union, as soon as a clear definition of highly biodiverse grasslands is given. Outside the EU, biodiversity loss cannot be ruled out, especially not in grassland areas. Moreo-ver, through the displacement effect of current agricultural practices, biodiversity loss may even be aggravated due to the push for biofuels. Therefore, additional protection of valuable ecosys-tems may be needed in combination with the proposed sustainability criteria.

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Summary

Macro monitoring needed to address the issue of food security

In the proposal, the issue of food security is only addressed by the European Commission’s reporting obligations, starting in 2012. The proposed target for the use of biofuels will very likely lead to higher global food prices, especially if this target is combined with targets from other countries, such as the United States. Food exporting countries will benefit from higher food prices, whereas especially poorer food importing countries will suffer from higher food prices and to some extent benefit from cheaper oil prices. Since it is not possible to prevent the conceivably negative impacts on food security of biofuel policies with individual consignments, an adequate, global early warning system may be needed as part of the EU biofuel policy. Such an early warning system could help to timely signal increased risk on food security. This issue is of added importance since the EU has endorsed the Millennium Development Goals.

Future biofuels (‘second generation’) will also need land

For future application of biofuels, hopes are that upcoming techniques (‘second generation’) will perform much better than present agricultural crops. However, the report shows no clear difference between first and second generation, when all byproducts of first generation biofuels are considered and the amount of energy per hectare is regarded. Therefore, conclusions on first or second generation biofuels can only be drawn when the full production chain is considered and the total energy content of the production chain per hectare is considered. When soil emis-sions are excluded, most of the values of each production chain are emission reductions of between 5 and 15 tonnes of CO2 equivalent per hectare per year, and 50 to 200 GJ per hectare.

For biofuel production chains, which deliver byproducts such as animal feed, the energy values may be much larger when substitution of all byproducts is considered. Examples of these production chains are wheat and rapeseed. Applying the Commission’s soil carbon contents, the potential soil emissions, following undesired land conversion, may reach a value of 18 tonnes of CO2 equivalent per hectare per year, for a period of several decades. This conversion means

that almost none of the biofuels can comply with the criterion of 35% reduction. Therefore, the results of land demanding biofuels are, in all cases, very dependent on the location of where they are grown. Future biofuels from woody and non-woody materials or whole grains will ask for land, as well. Theoretically, these so-called second generation biofuels are better suited for degraded lands and other idle land. However, the current Directive only excludes certain areas from being used, and it does not dictate that these biofuels should only be grown on degraded and idle lands. The conclusion is probably easier to draw when waste and residuals are used for biofuel production, but it is the expectation that these types of biofuel will not enter the transport market in large amounts, before 2020.

Incentives for alternatives for transport should be implemented

The advantage of biofuels is that they can easily be introduced in the present transport system, just by blending a certain percentage of them with fossil fuels. It seems that energy security is the most valid argument for promoting biofuels in the transport sector. The costs of first genera-tion biofuels are not a real high barrier, especially with the present high oil prices. However, the potential to reduce greenhouse gas emissions in 2020 is quite low. Moreover, biodiversity losses cannot be excluded and impacts on food security through food price effects are likely. Since the proposed Directive will put an additional pressure on global land use, the mandatory 10%-target in 2020 is debatable. Alternatives for the transport sector do exist. The most impor-tant (new) driving technologies for vehicles are: steep increase of fuel efficiency of existing petrol and diesel engines, further stimulation of hybrids, plug-in hybrids and completely electric cars or fuel cell cars on hydrogen. The costs of the latter are still relatively high, because they

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are in the development phase. There are lots of uncertainties about their role in future. However, in a long-term transition process towards a new transport system, their potential seems high, although their impact depends on the sustainability of the hydrogen production and the genera-tion of electricity. The proposed target in the Commission’s proposal, weighted with final energy consumption, is not stimulating these alternatives routes. Although hydrogen and electricity are promising fuels for transport when the potential distance travelled per kilometre is assessed, further improvement of the performance of fuel-cells, batteries and cost reduction are necessary to make them realistic alternatives. There is no certainty that these improvements can be realised in time or at all. Therefore at this moment, it is best to support all alternatives for transport. This Commission’s proposal does not.

10% target should be reconsidered

Given all these considerations, the current obligatory target for transport in 2020 should be reconsidered. The presently proposed target and the sustainability criteria can not prevent impor-tant negative impacts on greenhouse gas emissions and global biodiversity. When biofuels are fully stimulated by the EU, compensating mechanisms such as payment for protection of biodi-versity and support for food importing regions, should also be in place. Whether the total renew-able target can be achieved without a mandatory target in the transport sector, should be part of further research. Obviously, biomass can still be used in other sectors, such as heating and cooling, electricity and bio-based products, although sustainability criteria have not been applied in these sectors, yet. For the transport sector, the impact on greenhouse gas reduction and energy security of other Directives, such as the Fuel Quality Directive and the CO2 standards, should

be investigated as well. The conclusion of that research may be that other mandatory targets, as currently proposed by the European Commission in the Renewable Directive, are not improving the outcome of greenhouse gas reduction and increase in energy security.

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Introduction 1

1 Introduction

On the 23 January 2008, the European Commission released its climate and energy policy package, including European targets for greenhouse gas reductions and shares of renewables for all EU Member States in 2020 (EC, 2008a). This package contains proposals for Directives following initiatives by the European leaders in March 2007. At that time, the European Council agreed to put forward an ambitious climate and energy policy package, including targets for greenhouse gas emission reduction, energy savings and share of renewables in the total energy consumption (EU, 2007). This policy package is supposed to put the European Union’s ambiti-ous targets to mitigate climate change into operation.

While the European Commission was working on detailed proposals for Directives following these targets set by the European Council, a debate on the use of bioenergy and, in particular, biofuels developed in the course of 2007. The term ‘biofuel’ is used when bioenergy for the transport sector is meant. Bioenergy refers to all biomass used for energy production, including for transport, electricity and the heating and cooling sector.

From initial positive reactions (EurActiv, 2007), and even reactions that the targets were set too low (FOE, 2007a), the debate focussed more and more on the performance of biofuels with respect to sustainability. In 2007, the OECD published the report ‘Biofuels: Is the cure worse than the disease?’ 1) The report raised two fundamental questions:

‘Do the technical means exist to produce biofuels in ways that enable the world to meet 1.

demand for transportation energy in more secure and less harmful ways, on a meaningful scale and without compromising the ability to feed a growing population?

Do current national and international policies that promote the production of biofuels repre-2.

sent the most cost-effective means of using biomass and the best way forward for the trans-port sector?’ (Doornbosch and Steenblik, 2007)

The report concluded that food shortages and damage to biodiversity are a possible conse-quence of a rush on energy crops, without clear benefits, since the claimed greenhouse gas reduction effects can be very small. Also in the scientific field questions were raised on the best use of available land with respect to biofuels. Righelato and Spracklen (2007) concluded that the carbon balance for reforestation is much better than for using first generation biofuels. The term first generation biofuels refers to fuels produced from (food) crops containing sugar, oil or starch that can be converted to biodiesel or bioethanol. The term second generation biofuels refers to fuels based on the process of converting all lignocellulosic (see section 3.1).

Very recently, Fargione et al. (2008) and Searchinger et al. (2008) concluded that biofuels are increasing global greenhouse gas emissions, through land-use emissions because of defo-restation. In their analyses, special attention was paid to the displacement effect of biofuels: bio fuels may occupy productive land and other agricultural practices are shifting towards newly formed arable land at the cost of existing ecosystems. The analyses in both studies quantified these displacement effects, assuming a worst-case scenario where all displacement leads to soil carbon emissions.

1 OECD claimed this report was not representing an official view of the OECD, but nevertheless the outreach of this report certainly benefited from OECD’s trademark.

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Additionally, in 2007, environmental non-governmental organisations (NGOs) also published critical reports on biofuels (FOE, 2007b). World Wide Funds (WWF) published its ‘position paper’ on biofuels, stating that ‘WWF will only support bioenergy that is environmentally, soci-ally and economicsoci-ally sustainable and considers that effective measures are needed to address issues like food security, protection of permanent grasslands, natural and semi-natural forests and other high conservation value areas, a fair level playing field for small producers and a posi-tive greenhouse gas balance over fossil fuels’ (WWF, 2007). Just before the publication of the European Commission’s proposal, a group of environmental NGOs demanded the introduction of much tougher standards for biofuel production, or to abandon mandatory transport biofuel targets altogether (De Clerck et al., 2008).

The discussion on biofuels steered towards the question of how different biofuels can be distin-guished. This discussion is reflected in the implementation of sustainability criteria that are conditional for allowing specific biofuels on the market. Different Member States produced several reports in which sustainable criteria were introduced (see chapter 3). The European Par liament also participated in the process of approving the new Fuel Quality Directive (EP, 2007). In the new proposal for an updated Fuel Quality Directive, the European Commission proposed a minimal reduction of 1% of greenhouse gas emissions per year from road trans-port fuels and non-road mobile machinery, starting in 2010 (EC, 2007a). This emission target is stimulating biofuels in the transport sector and, therefore, the European Parliament added sustainability criteria to this proposal. Currently, it is unclear where the sustainability criteria will be positioned: in the Fuel Quality Directive or in the Renewable Energy Directive. Clearly, the criteria in both Directives should be consistent, which, currently, is not the case.

This report gives a first analysis of the proposal for the Renewable Energy Directive by the European Commission, focussing on biofuels in the transport sector and the sustainability criteria as proposed by the Commission. The full title of the EC’s proposal is ‘Proposal for a Directive of the European Parliament and of the Council on the promotion of the use of energy from renewable sources’ (EC, 2008a). The broader intention of the Directive is to set a binding target to increase the level of renewable energy in the EU energy mix to 20% by 2020. The European Commission acknowledges that an integrated approach to climate and energy policy is needed, given that energy production and use are primary sources for greenhouse gas emissions. However, climate change is not the only reason to stimulate renewables in the EU. As the Euro-pean Commission states ‘the EuroEuro-pean Union’s increasing dependence on energy imports thre-atens its security of supply and implies higher prices. In contrast, boosting investment in energy efficiency, renewable energy and new technologies has wide-reaching benefits and contributes to the EU’s strategy for growth and jobs’ (EC, 2008a). The targets for renewables within the EU27 should be considered in this broader setting.

Specifically for the transport sector, the European Commission proposes a binding target of 10% of renewables compared to the final consumption of energy in the transport sector for each Member State in 2020. This 10%-target can only be met by biofuels that fulfil the sustainability criteria as proposed by the Commission. In combination with the different aspects of biofuel production, the following questions are addressed in the next sections:

To what extent are the sustainability criteria - as formulated by the European Commission 1.

- sufficient to assure the desired outcome, based on the initial reason for proposing these criteria?

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Introduction 1

Which biomass production chain meets best with the proposed criteria, and what are the 2.

geographical consequences of these criteria (domestic production versus import from diffe-rent regions)?

Which considerations could be added to improve the use of renewables in the transport 3.

sector?

This analysis encompasses a first reaction to the proposed sustainability criteria and addresses a number of sustainability aspects, ranging from greenhouse gas reductions and biodiversity concerns to other aspects like food security. These aspects are an issue at a local level in the production chain but also at a national and even global level. The conclusions on biofuels in the transport sector are not necessarily applicable to other uses of bioenergy in the electricity and heating and cooling sectors.

Chapter 2 gives a summary of the proposal by the European Commission. A general discus-sion on sustainability criteria is summarised in chapter 3. In chapter 4, the discusdiscus-sion focuses on the global impacts of the 10%-target. Thereafter, three sections are addressing the following sustainability concerns: greenhouse gas reductions, biodiversity, and food security. In chapter 8, the report concludes with considerations for improving the scope of the current proposal by the European Commission.

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Proposal by the European Commission 2

2 Proposal by the European Commission

The proposal for a Directive by the European Parliament and the Council on the promotion of the use of energy from renewable sources, is intended to replace earlier directives on renewables and biofuels and to introduce binding targets for all Member States of the European Community (EC, 2008a). A specific target for renewables in the transport sector is set in Article 3(3): ‘Each Member State shall ensure that its share of energy from renewable sources in transport in 2020 is at least 10% of final consumption of energy in transport in that Member State.’ To calculate the total energy consumed in transport, it is stated that “petroleum other than petrol and diesel shall not be taken into account”. In other words, the use of LPG is not considered in determining the total energy demand in the transport sector. Whether biofuels themselves need to be conside-red in the total energy use in 2020 is unclear.

In its communication the European Commission pays much attention to tackling the oil depen-dence of the transport sector as one of the most serious issues affecting the security of the energy supply in the EU. Therefore, the 10% target for the transport sector should not only be seen from an environmental, climatic point of view.

The 10%-target is expanded in Article 5(1) where the sustainability criteria are introduced: ‘Biofuels and other bioliquids that do not fulfil the environmental sustainability criteria in Article 15 shall not be taken into account.’ This specific focus on biofuels and bioliquids is of the utmost importance for the transport sector, since most of the bioliquids will be applied in this sector. In other sectors, solid biomass can be applied. At this stage, no sustainability criteria are introduced for this topic. By 31 December 2010, the European Commission will report on requirements for a sustainability scheme for other possible uses of biomass (Article 15 (7)). It is possible to use other renewable sources than biofuels in the transport sector, although ‘gas, electricity and hydrogen from renewable energy sources shall only be considered once in either the electricity sector, use for heating and cooling or the transport sector for calculating the share of final consumption of energy from renewable sources’ (Article 5(1)). In other words, other routes than liquid or gaseous biofuels are possible for the transport sector, but double counting of renewable energy (like wind power) to meet the target in both the electric power and transport sector, is prevented.

Article 15 states the environmental sustainability criteria. Article 15(2) indicates ‘the green-house gas saving from the use of biofuels and other bioliquids taken into account for the purpo-ses referred to shall be at least 35%’. This reduction is reached by applying the mix of renewa-bles, not by individual raw materials. Article 16 supplies further detail on how producers must prove the biofuels’ sustainability, including mass balance considerations of the biofuel mix. In Article 16 it is not entirely clear whether raw materials that do not meet the 35% greenhouse gas reduction may be considered as sustainable renewable. This part of the proposal could be clari-fied further. In Section 5 of this report, details are given on the proposed calculating procedure, as stated in Article 17 and Annexes of the proposal.

The biodiversity criteria are applicable to the raw materials produced (for each consignment). In Article 15(3), it is stated that ‘biofuels and other bioliquids taken into account for the purposes referred to shall not be made from raw material obtained from land with recognised high

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biodi-versity value, that is to say land that had one of the following statuses in or after January 2008, whether or not the land still has this status:

(a) forest undisturbed by significant human activity, that is to say, forest where there has been no known significant human intervention or where the last significant human intervention was sufficiently long ago to have allowed the natural species composition and processes to have become re-established;

(b) areas designated for nature protection purposes, unless evidence is provided that the produc-tion of that raw material did not interfere with those purposes.

(c) highly biodiverse grassland, that is to say grassland that is species-rich, not fertilised and not degraded.’

And Article 15(4) adds ‘Biofuels and other bioliquids taken into account for the purposes refer-red to shall not be made from raw material obtained from land with high carbon stock, that is to say land that had one of the following statuses in January 2008 and no longer has this status: (a) wetlands, that is to say land that is covered with or saturated by water permanently or for a

significant part of the year, including pristine peatland;

(b) continuously forested areas, that is to say land spanning more than 1 hectare with trees higher than 5 metres and a canopy cover of more than 30%, or trees able to reach these thresholds in situ.’

The difference between Articles 15(3) and 15(4) lies in the fact that ecosystems in Article 15(3) are not allowed to be touched at all as biodiversity concern, whereas the ecosystems in Article 15(4) may be used for biomass production, if the status of these ecosystems remains unchanged. So the gathering of wood residue and straw is allowed, but further encroaching of these ecosy-stems is not allowed. Fuels in Article 15(4) are therefore only extractable as second generation biofuels.

The definition of highly biodiverse grasslands is unclear. The Commission states that identifi-cation of these grasslands will occur in future comitology, although it is unclear whether these definitions will encompass all grasslands globally. This issue will be elaborated upon in section 6.

At this stage, other criteria - for example on food security - are not set. Even more important, ‘Member States shall not refuse to take into account biofuel and other bioliquids obtained in compliance with this Article, on other grounds of sustainability’ (Article 15(6)).

Other impacts of biofuels which are applied in the transport sector, are covered in obligatory reports, as set out in Article 19: ‘Member States shall submit a report to the Commission on progress in the promotion and use of energy from renewable sources by 30 June 2011 at the latest, and every 2 years thereafter’. In their report Member States must report ‘commodity price and land use changes within the Member State associated with its increased use of biomass and other forms of energy from renewable sources’, ‘the development and share of biofuels made from wastes, residues, grasses, straw and ligno-cellulosic material’ and ‘the estimated impact of biofuel production on biodiversity, water resources, water quality and soil quality’.

Consequences for Third World countries (especially regarding changes in commodity prices and negative effects on food security) will be reported on by the European Commission, in 2012 and every two years thereafter (as mentioned in Article 20). The Commission will base its report on those from Member States, and on reports from relevant third countries, intergovernmental

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orga-Proposal by the European Commission 2

nisations and other scientific and relevant pieces of work. In its report, the Commission ‘shall, if appropriate, propose corrective action’ (Article 20(5)).

To stimulate innovation, the Commission states in Article 18(4) that ‘for the purposes of demon-strating compliance with national renewable energy obligations placed on operators, the contribution made by biofuels produced from wastes, residues, non-food cellulosic material, and ligno-cellulosic material shall be considered to be twice that made by other biofuels.’ This intention, together with the high greenhouse gas reduction percentages as assumed in Annex VII B and E, give a clear incentive for second generation biofuels. The question remains, whether these new biofuels are available before 2020 and whether their supposed environmental benefits can really be obtained. This uncertainty will be addressed in chapter 8.

This short overview gives an insight in the basics of the Commission’s proposal on biofuels in the transport sector. Chapter 5 supplies more details on the counting procedure for greenhouse gas reduction, as proposed by the Commission. Since a certain percentage of greenhouse gas reduction needs to be obtained by using a mixture of biofuels, fuel suppliers can mix different biofuel production chains. For reporting reasons we focus on results per raw material. Chapter 6 elaborates on the consequences of the biodiversity criteria. And chapter 7 addresses the issue of food security.

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Biofuels and the sustainability criteria 3

3 Biofuels and the sustainability criteria

As described in chapter 2, the European Commission proposes sustainability criteria for two concrete issues: greenhouse gas reductions and biodiversity (EC, 2008a). Other issues are addressed in obligatory reports by Member States (Article 19) and obligatory reports by the European Commission itself, starting in 2012 (Article 20). Moreover, the Commission clearly stimulates the use of new biofuels by double counting (in Article 18) and sets higher greenhouse gas reductions in Appendix VII B. This chapter generally discusses the different biofuel produc-tion chains and the sustainability criteria, as proposed by different political entities.

3.1 Different types of biofuels

Two main products for biofuels in transport can be distinguished: bioethanol and biodiesel. Both bioliquids can be used in the European transport market, replacing petrol and diesel respectively. Europe consumes more diesel than petrol. In projections, 55% of the consumption of transport fuels consists of diesel (EC, 2007b). The share of vegetable oil - used directly in cars with adjus-ted engines - is decreasing quickly. Biogases, like biomethane, biohydrogen or biodimethylether, are expected to enter only small niche markets up to 2020.

Biodiesel

The three main routes of producing biodiesel:

Vegetable oils can be directly obtained from certain crops and converted into biodiesel •

through ‘transesterification’, a well-known and rather simple process. Examples of crops containing oil are rapeseed, sunflower and palm, oil from the latter of which cannot be produced efficiently inside the European Community. This type of biodiesel is suitable for blending with fossil diesel. Byproducts of this production, like glycerine, can be used in other applications.

Vegetable oils can be treated with hydrogen (hydrogenation). This new process produces a •

better quality biodiesel than is produced by esterification. This biodiesel can be used without blending.

All kinds of biomasses, including wood, straw or other lignocellulosic products, are initially •

treated in a gasification process. In a second step the gases are then converted by the Fischer-Tropsch (FT) process into biodiesel, which can be used without blending. This FT process is a well established, but rather complex, technology. Currently, this technology is only available on a small scale. The process can be used to produce other substances as well, like methanol or hydrogen.

Bioethanol

Bioethanol is produced through biological fermentation of sugars (applied mostly in Brazil) and starches (maize and wheat; respectively most applied in the United States and in Europe). Bio ethanol can be mixed with petrol in low percentages. For high blends (like E85) flexifuel cars are necessary. Most of the bioethanol in Europe is converted into additives like ETBE, which can be mixed with petrol more easily. The production of bioethanol from lignocellulose is not yet well established, however, several demonstration sites already exist. The most impor-tant issues for cost reduction are hydrolysis (costs for cellulase) and improving the efficiency of converting C5-sugars.

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Table 3.1 Sustainability criteria as proposed by the British LowCVP (2006)

Topics to be considered Aspects per topic

Conservation of carbon stocks Protection of above ground carbon Protection of soil carbon

Conservation of biodiversity Conservation of important ecosystems and species Basic good biodiversity practice

Sustainable use of water resources Efficient water use in water critical areas Avoidance of diffuse water pollution

Maintenance of soil fertility Protection of soil structure and avoidance of erosion Maintain nutrient status

Good fertiliser practice

Agricultural practice Use of inputs complies with relevant legislation Use of inputs justified by documented problem Safe handling of materials

Waste management Compliance with relevant legislation Safe storage and segregation of waste

This report will use the term ‘second generation’ (as it is most often used) to refer to biofuels (both biodiesel and bioethanol) based on lignocellulosic material (wood, straw, grass etc.). However, in many cases, because the so-called ‘first generation’ biofuels are being improved step by step, producers call their improved products ‘second generation’ as well. Therefore, these names might be somewhat confusing in discussions on biofuels in general.

3.2 Sustainability criteria

The Commission’s focus on greenhouse gas reductions and biodiversity aspects is justified by the fact that other criteria cannot be set at a consignment level (EC, 2008c). This approach is different from initiatives on sustainability criteria in several Member States (most concrete in United Kingdom, Germany and the Netherlands) and from proposals by the European Parlia-ment as was done for the Fuel Quality Directive (see chapter 1).

In the United Kingdom, the Low Carbon Vehicle Partnership has proposed sustainability crite-ria on several additional topics (Table 3.1).In its analysis, LowCVP_{pays most attention to the}

impacts of biofuels on the greenhouse gas balance, including soil carbon, and other environmen-tal impacts.

The Cramer Committee 1)_{in the Netherlands composed a similar list of sustainability indicators,} but with greater focus towards global effects on local communities in Third World countries. The topics addressed are (Cramer et al., 2007):

Greenhouse gas balance: measured over the complete production chain, a greenhouse gas •

reduction of 30%, compared to use of fossil fuels, must be met in the transport sector.

Competition with food and other local applications: production of biomass may not endanger •

the food production and other applications (for medicines et cetera).

Biodiversity: biomass production may not affect protected or vulnerable biodiversity. •

Environment: quality of soil, air and water must be sustained. •

Welfare: production of biomass must contribute to local welfare. •

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Biofuels and the sustainability criteria 3

Well-being: production of biomass must contribute to the well-being of employees and local •

population.

In its report on the Fuel Quality Directive (EC, 2007a), the European Parliament has proposed amendments to include sustainability criteria, which are very similar to the Cramer topics. Most important is the amendment that ‘biofuels should show a greenhouse gas reduction of at least 50%, compared to fossil fuels, in order to offset the negative effects of growing fuel crops, such as negative environmental effects, increased competition for land, water and food, and incre-ased pressure on natural forests and local communities’ (EP, 2007). But in its amendments, the European Parliament also introduced further criteria that need to be met before subsidies may be granted to specific production chains. These criteria demand that ‘international conventions and regulations are complied with, in particular relevant International Labour Organisation (ILO) standards and United Nations conventions for the protection of indigenous people’, ‘no signifi-cant effect on water resources occur due to biofuels production’, ‘air, water and soil quality is not adversely affected by extraction of fuel feedstock production’ and ‘no deforestation or net loss of other carbon stocks above or below ground occurs due to fuel feedstock production’ (EP, 2007).

Clearly, the amount of greenhouse gas (GHG) reduction that is required is one of the most important issues on the table. However, the methodology used to calculate the amount of reduc-tion that can be achieved by using biofuels, is a strong determining factor in such a calculareduc-tion. Therefore, a clear methodology for the counting of greenhouse gas reductions is essential before production chains can be assessed. This issue is discussed in chapter 5.

The areas that are covered by these criteria in the United Kingdom, the Netherlands and the European Parliament are very much related. This is also the case for the German government in its first response to the Fuel Quality Directive. In its first response to the Fuel Quality Directive, Germany also mentioned several issues that need to be considered for the production of biofuels. Issues mentioned are emissions that may cause acidification or eutrophication or ozone destruc-tion, impacts on soil functions or soil fertility, impacts on water quality or water supply and an environmentally sound use of fertiliser and pesticide. The discussion within the proposal of the European Commission seems to focus on how the greenhouse gas reduction should be counted and how criteria in other fields can be implemented at the production level (per consignment). The addition in the proposal of the European Commission, saying that ‘Member States shall not refuse to take into account biofuel and other bioliquids obtained in compliance with this Article, on other grounds of sustainability’ (Article 15(6)) is logical, from the perspective of produ-cers and fuel suppliers. Otherwise, fuel suppliers would need to consider different criteria per Member State. However, it is unclear to what extent this Article allows different Member States to apply different subsidy regimes per production chain. Clearly, this Article is no incentive for Member States to continue with initiatives on proposing additional sustainability criteria in the Member States.

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Global effects of a 10% target 4

4 Global effects of a 10% target

Before focussing on individual sustainability aspects, it is crucial to determine to what extent the 10% biofuel target can be produced within the European Union and to what its impact will be on regions outside the EU. This chapter gives an analysis of the global effects of the 10% target. These aspects are also analysed by the European Commission in its Impacts Assessments (EC, 2006b; EC, 2008b). This chapter starts with a short overview of these Impact Assessments.

4.1 Commission’s Impact Assessment

The European Commission’s proposal for a Directive on renewables (EC, 2008a) is accompanied by an Impact Assessment (EC, 2008b). This assessment does not explicitly address the trans-port target, since this issue was covered extensively in the Commission’s Renewable Energy Roadmap (EC, 2006a). The Impact Assessment mentions the transport target as a 10% biofuel target only, although other routes for transport are thinkable as well. The main conclusion in the Impact Assessment states that the 10% biofuel target ‘would incur significant additional costs but result in a significant reduction of oil imports, generate extra employment and reduce green-house gas emissions’ (EC, 2008b). In the provisional annex to the Impact Assessment some more detail on the transport target is given. In this annex it is stated that ‘it is not the function of the present impact assessment to repeat the investigation of whether such a [10%] target is appro-priate. The issue to be addressed here is how to design a legislative proposal that will ensure that the 10% target is achieved in an optimal way’ (EC, 2008c).

In the annex, the Commission also clearly states that criteria on other aspects than greenhouse gas reductions and biodiversity cannot be covered by criteria on individual consignments of biofuels. On food security the Commission concludes that ‘it is recommended that assessment of positive and negative food security impacts should be an important element in the regular monitoring of the implementation of the policy’ (EC, 2008c). This conclusion is further discus-sed in section 7. On the question of whether the 10% target will lead to additional land use, the Commission concludes that ‘it can be expected that the main impact of increased biofuel demand will be a further increase in productivity, not an increase in the quantity of land used for agriculture’ (EC, 2008c). This conclusion is poorly documented. Further on, the Commis-sion concludes that land-use change can only be penalised when it is caused by individual consignments.

In earlier analyses, the European Commission also paid attention to the issue of biofuels. The Impact Assessment of the Renewable Energy Roadmap (EC, 2006b) is often referred to, although its accompanying document the Biofuels Progress Report (EC, 2006c) contains the most valua-ble information. In this document the consequences of a 7% and 14% biofuel target are asses-sed. The arable land that is needed for these targets is 7.6 or 18.3 million hectares, respectively (EC, 2006c). In both cases about 25% of biofuels is assumed to be imported from outside the European Union. The share of ‘second generation’ biofuels is assumed to be between 20% and almost 40%, respectively. Within the European Union, land which is set-aside is considered to be available for biofuel production, as is some of the abandoned land. Some arable land will be re-orientated from export production to biofuel production. However, the consequences for land use outside the European Union are not addressed. On the basis of this analysis, the 10% target has been set to follow a middle path between both analysed targets of 7 and 14%.

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The Directorate-General for Agriculture and Rural Development also published their own analysis on the 10% biofuel target (Figure 4.1; EC, 2007b). In it is concluded that ‘the 10% scenario does not overly stretch the land availability nor does it lead to a significant increase of intensities of production because of the limited pressure on markets. The long term until 2020 and the relatively small increase in cereal feed use in the EU over that time would leave enough possibilities for European farmers to support this new market outlet without a danger of retur-ning to fertiliser and pesticide input patterns seen until the late 1980s. Farm employment could be expected to decline less than under a scenario without biofuel and additional jobs would be created in the downstream activities and processing of biofuel’ (EC, 2007b). This conclusion is built on the following assumptions: land, currently set-aside, will be used for production of biofuels, a fair amount of domestic use of agricultural products will be diverted, export of crops will be lowered, more ‘second generation’ biofuels will be readily available (30% of the total biofuel demand) and 18% of the biofuel demand will be imported (Figure 4.1). The impact of these changing trade regimes on countries outside the EU is not considered in the above analy-sis. The sensitivity analysis shows that the land-use results and the amount of imported biofuels are very much dependent on assumptions of availability of ‘second generation’ biofuels. When second generation biofuels contribute 20% to the biofuel demand, imports to the EU will account for 30% of the total biofuel demand and when no second generation biofuels are available, around 50% of the biofuels will be imported (EC, 2007b).

These Impact Assessments show the most crucial uncertainties when global impacts are conside-red: 1) how much land will be available within the European Union and 2) how much in biofuels will be imported. Both results are dependent on the availability of new techniques by 2020. Both aspects are elaborated upon in the next subsections. Section 4.2 addresses the context of global land use (also for food and feed).

Bioethanol Biodiesel 0 4 8 12 16

20 million tonne crude oil equivalent

Imports

Other use of European land Export diversion Diversion of domestic use Production

Sugarbeets Second generation First generation

Sources for bioethanol and biodiesel production in 2020

Figure 4.1 Sources of feedstocks for bioethanol and biodiesel production in 2020 in crude oil equivalent (Mtoe; EC, 2007b).

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4.2 Impacts on land use

The impact of a 10%-target on land use can only be considered when other global developments are also taken into account. The assumption that 10% of the European transport consumption is provided by biofuels in 2020, demands for a biofuel production that is equivalent to 34.6 Mtoe or 1.45 EJ (Figure 4.1; EC, 2007b). As the share of diesel in Europe is higher compared to petrol, the biodiesel production is 19 Mtoe and the bioethanol production 15.6 Mtoe. Expressed in litres of fuel this equals 22.9 billion litres of biodiesel and 29.2 billion litres of bioethanol, although another ratio might be possible.

Increasing crop production

This demand for biofuels has to be met in a world where other land-demanding commodities are also asked for. To take global developments into consideration, the OECD-FAO Outlook 2006-2016 (OECD/FAO, 2007) is taken as the basic source of future developments in agriculture. The required data on production and land demand are taken from this Outlook, for the most relevant food/feed and fuel crops, and extrapolated to 2020. The growth in production demand is based on the development up to 2016 and the yearly yield increase is based on the development over the last 5 years of this period. The data also reflect a presumed yearly yield increase, which is assumed to occur as the result of improved management and better crop varieties. For example, the presumed yield increase in EU27 in 2020 (compared to the yield of 2006) is 21% for wheat, 18% for maize and 38% for oilseeds.

In the baseline scenario until 2020 (OECD/FAO, 2007), a global increase in the production of different crops is expected, even without additional policies on biofuels. This increase is due to

1970 1980 1990 2000 2010 2020 2030 0 600 1200 1800 2400

3000 million tonne _{Cereals for energy} Demand to meet EU Biofuel Directive and target of US in 2020 OECD-FAO Outlook Cereals for food and feed

Rice Coarse grains -exclusive maize Maize Wheat

Global production of cereals

Figure 4.2 Global production of all cereal products from 1961 to 2020, including implementation of biofuel policies by the EU and US. Food and feed projection is based on OECD-FAO Outlook (2007).

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further development in global consumption and to a shift towards more protein rich food, mainly caused by population increase and economic growth. The demand for biofuels is expected to increase, too, because of improved competitiveness of biofuels compared to fossil fuels. Figures 4.2 and 4.3 show the expected increase of global cereal production (wheat, maize, rice and other grains) and global vegetable oil production, respectively for food and feed and for biofuels, according to OECD/FAO (2007). On top of these reference developments, additional biofuel poli-cies are implemented. Since the proposal by the European Commission is not the only proposal on biofuels, the impact of the United States (US) policies is also included. The US are aiming at a production of 132.6 billion litres of bioethanol in 2017 (35 billion gallons). In the US, the main crop used for energy is corn (maize), which is used for the production of bioethanol. In the EU, the main energy crops are oil crops, cultivated for the 23 billion litres of biodiesel (rapeseed, sunflower) and the 30 billion litres of bioethanol (wheat, maize and sugar beet). The required production of these crops is added in Figures 4.2 and 4.3. This shows that the global cereal and vegetable oil production needs to increase further until 2020.

Impacts on land use

These tonnes of crops make a demand on land. The demand in land use is dependent of (crop) productivities, the biomass product and the considered type of land. Therefore, all these aspects need to be taken into account using a scenario study. Here, the OECD/FAO Outlook (OECD/FAO, 2007) is used. No additional biofuel policies are applied in this Outlook.

First, global land use of all arable land is considered. When all cereals are regarded (wheat, rice, maize et cetera), OECD-FAO expects an increase of arable cereal land of 3.4% between 2006 and

1970 1980 1990 2000 2010 2020 2030 0 40 80 120 160

200 million tonne _{To meet EU Biofuel} Directive and target of US 2020 OECD-FAO Outlook

Food

Global production of vegetable oils

Figure 4.3 Global production of vegetable oil products from 1961 to 2020, including implementation of biofuel policies by the EU and US. Food and feed projection is based on OECD-FAO Outlook (2007).

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2016. For all oil seeds an area increase of around 7% is expected (OECD/FAO, 2007). These area increases include expected yield increases.

To analyse the impact which the growing demand for biofuels has on land use, the five most important food crops -used for production of first generation biofuels- are selected: wheat, corn, oilseeds (e.g. rapeseed, sunflower and soybean), palm oil and sugar cane. The production of these crops utilise about one third of the total in global arable land area and one eighth of the total in globally utilized as agricultural land. In 2000, the total global area that these crops took up was around 500 Mha. According to the OECD-FAO Outlook, this area is expected to reach 555 Mha in 2020. Of this total, the area used for biofuels is expected to increase from 4 Mha in 2000 (less than 1% of the total area of wheat, maize, sugar cane and oilseeds) to 35 Mha in 2020 (more than 6%), assuming default developments (OECD/FAO, 2007). This scenario shows that 60% of the land increase between 2000 and 2020 will be due to the demand for biofuels, and that 40% will be due to the demand for food and feed. The development of biofuel areas is visualised in Figure 4.4 (left panel).

When the United States and EU targets are both considered, the size of the area needed for biofuels increases to around 60 Mha in 2020 (Figure 4.4; right panel). For the EU, it is assumed that about two-thirds of the required feedstocks for the production of biofuels will be produced

2000 2010 2020 2030 0 10 20 30 40 million ha EU27 US and Canada

Brazil (inclusive area for export) Asia (export to EU)

OECD-FAO Outlook

Biofuel area in four main biofuel regions

2000 2010 2020 2030 0 10 20 30 40 million ha

To meet EU Biofuel Directive and target of US 2020

Figure 4.4 Size of biofuel area in EU, US, Canada, Brazil and Asia, according to

OECD/FAO (left panel; 2007) and while meeting the United States and EU targets in their own regions (right panel).

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locally, and one-third will be imported from both Brazil (bioethanol) and Asia (palm oil). For the US, it is assumed that 100% of the required feedstocks for the production of bioethanol will be produced locally. It is assumed that the average regional yield will also apply to the additio-nal land that is required worldwide. The additioadditio-nal demand shows that between 2000 and 2020, 70% of the increase in required land is due to the demand for biofuels and 30% is due to the demand for food and feed. The resulting biofuel area constitutes almost 10% of the total area of wheat, maize, sugar cane and oilseeds (581 Mha).

In Europe, an area of around 16 Mha is probably needed for biofuels. This area is needed for the production of about two-thirds of the feedstocks required to meet the biofuel target in the EU. The remaining production will have to be imported. Calculations show that, to meet the biodiesel demand, an additional land area of about 5 Mha (palm oil) is needed, and that meeting the bioethanol demand requires an additional land area of about 1.5 Mha (sugar cane in Brazil). When no biofuels are grown, some of the crop area is still needed to grow animal feed

EU8 EU15 EU23 0

10 20

30 million ha

Available grassland and olive groves

Additional available arable land due to high energy and carbon prices (only for Germany and France) Available arable land

2010

Land available for biomass production for energy

EU8 EU15 EU23 0

10 20

30 million ha

2020

EU8 EU15 EU23 0

10 20

30 million ha

2030

Figure 4.5 Projected land released from agricultural use within Europe that can be used for biomass production (EEA, 2006). EU23 refers to the 25 European Member States in 2004, except Malta and Cyprus. EU8 and EU15 are subtotals, comprising accessed countries from Central Europe in 2004 and the 15 ‘old’ Western European Member States, respectively.

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(a by-product of first generation biofuels). Therefore, one can conclude that 14 Mha is solely needed to fulfil the 57% of the EU 10%-target when the entire production is taken in first gene-ration biofuels only. The additional 43% of the target requires about 6.5 Mha outside Europe. These figures are based on the assumption that the average yield of the additionally required land is equal to the average of the whole region. This may lead to some underestimation of total land area, because the additionally required land is likely less suitable. A lower than projected yearly yield increase might cause some additional uncertainty, also. It is concluded that the required land area in total might have a range from 20 up to 25-30 Mha.

Again, introduction of new techniques (second generation biofuels) may lower the demand for land, but it is very unlikely that the total land demand for the Commission’s biofuel target will be less than 20 Mha.

4.3 Land availability within Europe

The next question is, whether such an amount (at least 20 Mha, of which 15 Mha in Europe itself) is available. According to a study by the European Environment Agency on Euro-pean potentials (EEA, 2006), the amount of agricultural land in the EU22 that can be used for bioenergy production amounts up to 16 million hectares by 2020 (Figure 4.5). This land can be found in both Central and West European countries, mainly in Poland, Spain, Italy, the United Kingdom, Lithuania and Hungary. Germany and France are expected to release substantial areas due to the competition effect of bioenergy production versus food/feed production for exports (EEA, 2006). The potential available land is made up of arable land released from food and fodder production, and land that is released through productivity increases. In the EEA study even specific biodiversity criteria are considered (EEA, 2006). This study is the basis of many assumptions that all biofuels can be produced within the EU.

In the EEA study, countries without any available agricultural land are generally those with inten-sive or very competitive farming systems. High biodiversity grasslands are excluded, as they are valuable for important elements of (agro-)biodiversity (birdlands, species rich swards et cetera). The applied land-use criteria are comparable to those in the Commission’s proposal. More land may be available when grasslands and olive groves are taken into account, but these probably do not qualify under the presently proposed criteria (EEA, 2006; Figure 4.5).

Here, a crucial consideration will be how current set-aside land will be used for biofuel produc-tion. In European impact assessments, it is assumed that around 5 Mha set-aside land may be used for biofuel production (section 4.1; EC, 2007b). After 1993, the EU wanted to limit produc-tion of commodity crops like cereals and introduced ‘set-aside land’. Under this arrangement, a defined percentage of productive agricultural land was taken out of production and farmers received compensation for this set-aside land. From 2000 onwards, the percentage of obligatory set-aside in the EU15 was set at 10%. In the new Member States farmers are exempted from the obligation of set-aside. Set-aside agricultural land is mainly found in Germany, Spain, France and the United Kingdom. Altogether about 5.6 million hectares in the EU15 was registered as set-aside in 2005, which is some 4.3% of the utilised agricultural area. The set-aside regulation allowed industrial production of crops for non-food or feed purposes, mainly biofuels. In 2005, about 1 million hectares of set-aside was used for this purpose, more than half of it located in Germany. In 2007 the obligatory set-aside percentage was set at 0% because of the increasingly tight situation on the cereals market. The Commission expects that, due to this proposal, 1.6

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to 2.9 million hectares are returned into agricultural food production. Although not originally meant as environmental measure, the set-aside arrangement contributed positively to support biodiversity in farmland areas. This was particularly studied in Britain and several field studies showed that several farmland birds, in particular, benefitted from set-aside (DEFRA, 2007). Therefore, the use of set-aside land for biofuel production will encounter a discussion whether this land can be used without affecting biodiversity concerns (chapter 6).

Nevertheless, the theoretical available amount of land, as estimated by the EEA (Figure 4.5; 2006), seems sufficient for the European ambition in 2020, which requires about 15 million hectares of productive land within the EU (Figure 4.4; right panel). Of course, the answer to whether this can be really achieved depends on the condition under which land will become available. In the EEA scenario study, abandonment takes place under the assumption of a further reform of the CAP (Common Agricultural Policy), with total liberalisation of the animal product markets. In other studies where other choices in CAP reform are simulated, other results for land availability are given. For example, the Eururalis-2 scenario study includes a scenario that accentuates regional market development instead of a global economy, and projects only 3.5 million hectares of abandoned agricultural land (Rienks, 2008). Therefore, the availability of land within Europe, in combination with biodiversity concerns as laid out in the proposal for a Directive, is very much dependent on future changes in CAP. It seems that one of the more important conditions for land availability within Europe is liberalisation of CAP. The location of abandoned land within the EU is also uncertain. EEA (2006) indicates high potentials in Central Europe, whereas Eururalis-2 returns more abandoned land in the EU15 countries (Rienks, 2008; Eickhout and Prins, 2008).

2001

2020 Reference Biofuel Directive Reference, high oil price Biofuel Directive, high oil price

0 4 8 12 16

billion US$ (2001 US$)

Domestic Imported

Origin of biofuel crops used in the EU-27

Figure 4.6 Origin of biofuel crops used in the EU27 (in billion US$, 2001; Banse et al., 2008).

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4.4 Imports of biofuels

When European agricultural policies are liberalised completely (to get enough land available in the EU), it will be very difficult to maintain production of biofuels within the EU, given high competitiveness of biofuel production in other regions (for example sugar cane production in Brazil). When full liberalisation of the agricultural market is simulated in a macro-economic general equilibrium economic model (LEITAP; Van Meijl et al., 2006; Eickhout et al., 2007), in combination with meeting the European biofuel target (Banse et al., 2008), more than 50% of the required biofuels will be imported from other regions. Even simulations with high oil prices are not affecting these results drastically (Figure 4.6). When scenarios are considered where no CAP reform is assumed, around 30% of the biofuels are still expected to be imported (Eickhout and Prins, 2008). These results are based on analyses with first generation biofuels (Banse et al., 2008).

Therefore, it will be very unlikely that all required biofuels will be grown in Europe. More importantly, the Commission’s proposal can be seen as an incentive to produce biofuels outside Europe, which is difficult to manage. Moreover, alternatives for bioethanol and biodiesel can be produced more efficiently in other regions. For example, when 50% of the required bioethanol is produced in Brazil with sugar cane, the area needed is ‘only’ 2 million ha. This shows that for reasons of productivity, production outside Europe is recommendable. This trade-off of produc-tivity and location of production is not addressed in the current proposal.

4.5 Conclusion

Even without an additional demand for biofuels, scenarios show a need for extra agricultural land on a global scale, because of population and welfare growth. Biofuels are an additional land demanding source and will lead to additional pressure on land. Even when productivity increases twice as fast as expected, additional land will be needed for growing crops for biofu-els. To increase land abandonment within the European Union, further liberalisation of Euro-pean agriculture is often considered. However, the same process of liberalisation will also lead to more imports of biofuels or biomass for biofuels. The implication is an extra conversion of land outside of Europe. It is assumed the cultivation of wood and woody materials can be done on land which is not suitable for food and feed production. However, the extra impetus in the Commission’s proposal to use these types of biomass is too weak to guarantee that this will occur in practice. Land conversion has two important ecological aspects: soil emissions of CO2

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